Zee Entertainment Enterprises (ZEEL) is back in the spotlight after its promoters increased their stake in the company. According to the brokerage, Nuvama, the company’s subscription revenue continues to rise steadily, while advertisement revenue is expected to recover in the coming quarters. The brokerage has maintained a ‘Buy’ rating for the stock.
Let’s break it down and understand what this means for investors as well as how is Zee Entertainment positioned for growth?
Nuvama on Zee Entertainment : Promoters boost stake
After a long gap, Zee Entertainment promoters have stepped in and acquired around 2.7 million shares worth Rs 270 million through open market purchases. This has raised their stake from 3.99% to 4.28%.
Promoters typically buy shares when they believe the stock is undervalued and has strong long-term potential. According to the brokerage report, “the quantum of this acquisition shows belief in the long-term prospects and growth potential of the company.”
Moreover, Zee Entertainment share price is currently trading at a one-year forward price-to-earnings (P/E) ratio of 10x, significantly lower than its historical average of 14x, added the brokerage report.
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Zee’s subscription revenue has been on a steady upward trend for the last seven quarters. In Q3FY25, it recorded a 6.6% year-on-year (YoY) increase, primarily driven by Zee5’s growing subscriber base.
This segment is expected to continue its growth trajectory, aided by price hikes in traditional TV services, expanding digital subscriber base, and strong content pipeline, added the report.
Nuvama on Zee Entertainment: Ad revenue challenges
Zee Entertainment, like many other media houses, has been facing challenges in advertising revenue due to weak macroeconomic conditions. The urban slowdown has particularly affected FMCG brands, a key revenue driver for broadcasters.
However, as per the brokerage report, ad revenue is likely to rebound from Q2FY26 onwards, supported by a recovery in urban demand and falling crude oil prices, boosting FMCG companies’ margins and ad budgets.
According to the brokerage report, “We reckon ad spends shall improve for these companies in FY26 with falling crude prices increasing the wallet share towards ad spends.”
In addition to this, Zee Entertainment has been shifting focus from national brands to local FMCG advertisers,
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